Kobe Steel to Manufacture Rubber Processing Equipment in India

Kobe Steel, Ltd. announces that it has formed a joint venture with India's Larsen & Toubro Limited to manufacture and sell rubber processing machinery.

Called L&T Kobelco Machinery Private Limited, the joint venture will make rubber mixers and twin screw rollerhead extruders used in manufacturing tires. Plans call for construction of the plant to begin in February 2011 and production to begin in October 2011. Approximately 500 million rupees (900 million yen) will be invested in the facility.

Established in November 2010, the company is capitalized at 500 million rupees (900 million yen). L&T Kobelco is 51% owned by Larsen & Toubro and 49% by Kobe Steel. The Company will be managed by a Board of Directors comprising nominees from Kobe and L&T.

Tire and rubber machinery is used to manufacture tires for automobiles and construction equipment. Demand has been rising in recent years owing to rising production of automobiles mainly in emerging countries. In 2008, world demand for rubber mixers increased 5% to US$325 million, said the European Rubber Journal in 2009, and is continuing to increase.

Kobe Steel currently manufactures tire and rubber machinery in three countries. In addition to Japan, the other manufacturing centers are Kobelco Stewart Bolling, Inc., which makes mainly rubber mixers and twin screw extruders in Ohio, USA and Yiyang Yishen Rubber Machinery Co., Ltd., which makes tire curing presses in Hunan Province, China. Kobe Steel is regarded as the top maker of rubber mixers, with an estimated world share of approximately 50%, according to the European Rubber Journal.

In 2003, Kobe Steel began providing Larsen & Toubro with technology to produce tire curing presses, building a solid relationship over the years. A strategic partner of Kobe Steel in India, Larsen & Toubro is India's top manufacturer of tire curing presses and has a strong sales network in India, Europe and the Middle East. The new joint venture, making full use of this sales network, plans to market its products in India, Europe, the Middle East, Africa, Russia and Eastern Europe - where to date Kobe Steel has had relatively low sales. Annual sales are anticipated to reach US$45 million in the 2014-2015 fiscal year.

The new joint venture enables Kobe Steel's tire and rubber machinery business to create a network in four countries: Japan, the United States, India and China. From these four locations, Kobe Steel will be able to supply customers with the same quality products as they globalize their operations.

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